EC considers new law to tackle unfair online trading practices

The European Commission is considering a new law to deal with unfair trading practices after deciding further action is necessary to promote fairness and responsibility of online platforms.

The initiative was revealed on Wednesday (10th May) as part of a mid-term review of the Digital Single Market (DSM) strategy, launched in 2015. It emphasises the need for an environment "where all players can operate under fair and balanced conditions" and follows its decision last week to hold Amazon to its promise to remove "Most Favoured Nation" (MFN) clauses from its e-book distribution contracts with publishers for the next five years, with the commitment now legally binding. 

The Commission now says it is preparing legislation to address issues of possible unfair contractual clauses and trading practices in such relationships by the end of 2017, based on a thorough "impact assessment".

"The Commission will prepare actions to address the issues of unfair contractual clauses and trading practices identified in platform-to-business relationships, including by exploring dispute resolution, fair practices criteria and transparency," it said in a statement. "These actions could, on the basis of an Impact Assessment and informed by structured dialogues with Member States and stakeholders, take the form of a legislative instrument. This work will be finalised by the end of 2017. The Commission will also continue to use its competition enforcement powers wherever relevant."

It added: "We must create a legal framework that stimulates innovation and tackles market fragmentation to enable a clear, stable and trusted environment where all players can operate under fair and balanced conditions."

The legislation is expected to tackle complaints made against online giants including Apple and Google, according to Reuters. The Commission said it has conducted a fact-finding exercise on platform-to-business trading practices, with preliminary results indicating some online platforms have been "delisting’" products and services without sufficient notice. It also noted "widespread concern" that some platforms may be favouring their own products and services and a lack of transparency in search result rankings was identified as another issue. 

In providing its mid-term review of its DSM strategy, the Commission said "good proress" had been made since it launched it in 2015. It took stock of 35 legislative proposals and policy initiatives it has delivered, notably new EU telecoms rules it says will boost investments in high-speed networks. It now needs to obtain political agreement with the European Parliament and the Council. It said a fully functioning DSM could contribute $415 billion per year to the EU's economy and create thousands of new jobs. 

Other areas where the EC thinks further "actions" are necessary "as soon as possible" include accelerating work on the European data economy and tackling cybersecurity. 

The Commission also advocated "substantial additional investment" in digital skills, infrastructure and technologies. Noting 44% of adult Europeans have low or no digital skills, it is planning to launch a "Digital Opportunity" scheme in 2018, a pilot project giving graduates in all disciplines hands-on experience through cross-border internships in the digital area. Another priority is social protection for workers in non-standard employment, for example online platform workers on atypical contracts. A consultation was opened on 26th April to open a debate on minimum safeguards.

Andrus Ansip, vice-president for the Digital Single Market, said: "The Commission has lived up to its promise and presented all main initiatives for building a Digital Single Market. Now, the European Parliament and Member States need to adopt these proposals as soon as possible, for new jobs, business and innovation to take off across Europe. Two years on, we propose to update our strategy to reflect new challenges and technologies. We need cyber-secure infrastructure across all parts of the EU so that everyone – everywhere – can enjoy high-speed connectivity safely. We have already agreed on strong EU rules for personal data protection; we now need to make sure that non-personal data can flow freely to assist connected cars and eHealth services. We need high-performance computing along with a digitally skilled workforce to make the most out of the data economy. All these areas are essential for Europe's digital future.”